The Effect of Brand Equity on Customer Satisfaction: An Empirical Study Based on David Aaker's Brand Equity Model

TL;DR: In this paper, the authors focus on the consumer perspective and study the association between brand equity dimensions, overall brand equity and customer satisfaction, and conclude that added value can generate brand equity by enhancing consumer association and perception about a particular brand.

Abstract: IntroductionThe concept of brand equity was brought to light initially in the late 1980s. Brand equity is an intangible asset which creates an association between the brand and its consumers. Brand equity can be viewed from three perspectives-financial, brand extension and the consumer. In this research, we focus on the consumer perspective. According to Keller (2003), "the power of a brand lies in what customers have learned, felt, seen, and heard about the brand as a result of their experiences over time." One way of knowing how customers are familiar with the brand is through brand equity. According to David Aaker, brand equity has four dimensions-brand loyalty, brand awareness, brand association and perceived quality. He states that "brand equity helps the customer to interpret and process information about the product, and also affects the customer's confidence in the purchase decision and the quality of user experience."The branded shoes market in Pakistan is facing a challenging environment due to growing competition and increasing number of brands. A large number of branded shoes are competing in the market, and customers are showing increasing preference for branded shoes. Companies are therefore more focused on establishing a strong brand identity for their products in order to attract customers and build customer satisfaction. Brand equity research plays a vital role in helping brand managers to build brand equity and gain competitive advantage. This research studies the association between brand equity dimensions, overall brand equity and customer satisfaction.Literature ReviewBrand EquityMany researchers like Kotier, Keller and Aaker have provided definitions and models about brand equity. David Aaker was the first to introduce the concept of brand equity (during the 1980s). Aaker (1991) described brand equity as "a set of brand assets and liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service."Farquhar (1989) stated that we can generate brand equity by 'adding value' to the product. Keller (1993) introduced the customer-based brand equity model. He defined brand equity as "the differential effect of brand knowledge on consumer response to the marketing of the brand" and highlighted four steps to build and manage a brand. Kapferer (1992) came up with the brand identity prism. Yoo et al. (2000) described brand equity as "the difference in consumer choice between the focal branded product and an unbranded product, given the same level of product features." In conclusion, all the researchers agreed that added value can generate brand equity by enhancing consumer association and perception about a particular brand.According to Liaogang et al. (2007), generating brand equity and managing it is an important issue for the companies. Generating brand equity helps the companies in product differentiation and getting competitive advantage. According to Park and Srinivasan (1994), "brand equity is incremental utility and value endowed to a product or service by its brand name." According to Chen and Tseng (2010), "it is considered as a source of competitive advantage by many firms."Customer SatisfactionAccording to Howard and Sheth (1969), satisfaction is "the buyer's cognitive state of being adequately or inadequately rewarded for the sacrifices he has undergone." Oliver (1981) describes customer satisfaction as "the summary psychological state resulting when the emotion surrounding disconfirmed expectations is coupled with the consumer's prior feelings about the consumption experience." Vavra (1997) defined customer satisfaction as "a satisfactory post-purchase experience with a product or service given an existing purchase expectation." According to these studies, customer satisfaction increases the purchase intent.Hypotheses DevelopmentBrand Loyalty and Brand EquitySheth and Park (1974) concluded that loyalty has three dimensions. …